Axsesstoday Limited Class Action

Background on Axsesstoday Limited

Axsesstoday Limited (AXL) was established in 2012 and operated as a lender to small to medium sized enterprises and was listed on the Australian Stock Exchange.

On 26 June 2018, AXL offered to issue $50 million in simple corporate bonds described as “Axsesstoday Bonds – Series A, tranche 1” pursuant to the terms of the Offer Specific Prospectus dated 26 June 2018 (Bonds).

Several months after issue, AXL was found to be in breach of one or more banking covenants. The major cause of those breaches was the implementation of a new Australian Accounting Standard (AASB9) which, amongst other things, altered the requirements for the recognition of arrears, leading to a breach of the relevant arrears ratio. The directors ultimately appointed administrators in April 2019.

A Deed of Company Arrangement was subsequently entered into, under which investors received a payment in the vicinity of 27 cents in the dollar, leaving a significant shortfall on their investment.

Federal Court Proceedings

On 20 August 2020 Hicksons filed a class action in the Federal Court of Australia on behalf of a significant proportion of the bondholders, each of whom have signed a litigation funding agreement with Therium Litigation Finance Atlas AFP IC and a Retainer Agreement with Hicksons. The Representative applicant is Compumod Investments Pty Ltd as trustee of a staff superannuation fund.

The proceedings were commenced against Axsesstoday Limited (AXL) and Pricewaterhouse Coopers Securities Limited (PwCS), seeking recovery of the shortfall on the Bonds and interest payments which were not made. PwCS was the accounting advisor in connection with the prospectus documentation, which is alleged to have contained significant shortcomings.

The applicant alleges, among other things, that AXL made misleading and deceptive statements in, and omitted information that was required to be disclosed in, its prospectus, contravening the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. It is further alleged that in providing accounting advice in relation to the prospectus, PwCS was involved in those contraventions, in addition to itself engaging in misleading or deceptive conduct.

Significantly, the information which ought to have been contained in the prospectus is information concerning the likely potential effect of AASB9 on the financial statements of AXL and its ability to comply with its banking covenants.

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Further information is contained in our FAQ.

If you would like further information regarding the class action and whether you are eligible to register, please contact Premier Litigation Funding Management at [email protected] or email Hicksons at [email protected].

Key documents

Case updates

As previously notified on this site, the applicant filed the Third Further Amended Statement of Claim (3FASOC) on 22 December 2023 joining AXL’s insurers to the proceedings. We note that the insurance policy held by AXL was entered into by DUAL on behalf of the four underwriters at Lloyds, who have been joined as the third to sixth respondents (Underwriters).

Settlement between the Applicant and the Underwriters

The applicant and the Underwriters agreed to settle the class action between them. All Group Members will have received a notification of the proposed settlement.

The Settlement Sum represents the majority of proceeds available under the relevant insurance policy. The Underwriters’ liability is limited to the proceeds of the policy and nothing more.

On 27 May 2024, Justice Lee approved the settlement between the applicant and the Underwriters. Justice Lee’s judgment dated 27 May 2024 can be accessed here. The Settlement Sum has been paid and is currently being held on trust by Hicksons Lawyers pending the outcome of the balance of the Class Action.

Settlement between the Applicant and PwCS (the second respondent)

We are pleased to advise that shortly before the hearing was due to commence on 17 June 2024, a settlement was negotiated between the Applicant and PwCS under which PwCS will pay a sum of money to the applicant/group members. The settlement was subject to the entry by the parties into an appropriate deed of settlement and, importantly, it was also subject to the approval of the Court.

Accordingly, the hearing did not proceed in June.

The Settlement Deed was executed by the parties on 28 June 2024 and the proceedings were listed before Justice Markovic for hearing of the settlement approval application on 2 August 2024.

All group members should have received a Notice of Proposed Settlement, which outlined the main terms of the settlement and informed group members of their right to object to the settlement. No objections to the settlement were received.

Hicksons Lawyers, senior counsel and junior counsel acting for the applicant consider the settlement sum to be reasonable in all of the circumstances, having regard to the prospects of success and the risks of litigation. Senior and junior counsel prepared a confidential opinion to assist the Judge to determine whether to approve the settlement.

Justice Markovic made orders approving the settlement and also approving the deduction of the expenses outlined in the Litigation Funding Agreement signed by each group member. A copy of the judgment delivered on 15 August 2024 can be found here.

Now that the settlement has been approved, the settlement sums under both the settlement with the Underwriters and the settlement with PwCS will be distributed to group members after deduction of the expenses outlined in the Litigation Funding Agreement signed by each group member which have now been approved by the Court.

The settlement distribution process will be managed by Premier Litigation Funding Management Pty Limited (PLFM) and Group Members can expect to be contacted by PLFM regarding this process. That process will commence after the expiry of the appeal period of 28 days from 15 August 2024. We do not anticipate that any party will appeal the decision, as all parties consented to the orders sought.

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